Wednesday, July 26, 2017 Stamford, CT USA — The key decision-makers from German institutions participating in the annual Greenwich Associates research study say their top priority is meeting the challenge of low interest rates and yields. 

As they plot a course to meet this challenge, German institutions are increasingly relying on the counsel of the asset management firms like Allianz Global Investors and PIMCO—the 2017 Greenwich Quality Leaders in Overall German Institutional Investment Management. 

German institutional investors name persistently low interest rates as their primary concern for 2017, and many are taking their first steps to adjust allocations to their fixed-income-heavy portfolios in an effort to reach long-term return targets. “Finding new sources of return requires German institutions to move into less familiar and more complex asset classes, and to consider the implications on risk management and regulatory compliance frameworks,” says Greenwich Associates Managing Director Markus Ohlig. “In this environment, large managers with broad capabilities like Allianz GIobal Investors and PIMCO can be a valuable resource, and these firms’ abilities to provide knowledge and advice to large institutions is giving them a competitive advantage.”

Over the next three years, German institutions expect to shift additional assets out of government bonds and into equities, real assets and specialized fixed-income strategies. New and expanded allocations to these asset classes are pushing the limits of German institutions’ internal expertise and triggering increased demand for external management and counsel. 

The share of German institutions describing their organizations as expert and well-resourced for portfolio management has declined to 58% in 2017 from 71% in 2015. “Meanwhile, the share of institutions describing themselves as reliant on external advice increased to 59% this year from 51% in 2015,” says Greenwich Associates consultant Mark Buckley.